Shandre M. Thangavelu

Is there an export or import-led productivity growth in rapidly developing Asian countries? a multivariate VAR analysis

In contrast to cross-country studies, the paper investigates the relationships between trade and labour productivity for nine rapidly developing Asian countries in a time-series framework using a vector error-correction model. Independent tests on the long-run and short-run relationship between trade variables of exports and imports and productivity are conducted. The results suggest that trade has an important impact on productivity and output growth in the economy, however it is imports that provide the important ‘virtuous’ link between trade and output growth. The results indicate that exports and imports have qualitatively different impacts on labour productivity. The long-run result shows that there is no causal effect from exports to labour productivity growth for Hong Kong, Indonesia, Japan, Taiwan and Thailand; thereby suggesting that there is no export-led productivity growth in these countries. However, significant causal effects were found from imports to productivity growth, suggesting import-led productivity growth in India, Indonesia, Malaysia, Philippines, Singapore and Taiwan. In addition, the results indicate that imports tend to have greater positive impact on productivity growth in the long run.

The impact of export growth and scale economies on productivity in Singapore's manufacturing industries

This paper examines the impact of export performance and scale economies on total factor productivity in Singapores manufacturing sector. A panel data of total of ten major industries within its manufacturing sector are analysed over the period 1974‐1995. It was found that export growth and scale economies contributed significantly to the productivity growth of selected industries. In addition, the results also indicate that the foreign direct investment (FDI) intensive industries are the main contributors to productivity growth in the manufacturing industries in terms of export performance and economies of scale as compared to the non‐FDI intensive industries.

FDI, Growth and the Asian Financial Crisis: The Experience of Selected Asian Countries

This paper studies the trends in foreign direct investment (FDI) flows into selected South-East Asian and East Asian economies after the Asian crisis. Empirical evidence indicates that South-East and East Asian economies are recovering from the Asian crisis with strong output growth driven largely by export growth. However, output growth in the post-crisis period is also accompanied by rising unemployment rates, growing government deficits, and declining FDI inflows into the South-East Asian region. The declining FDI inflows into South-East Asia after the crisis is of concern, as our empirical results show that FDI is important for output growth in the region. Our results also suggest that there might have been structural changes in the regional economies that could have led to a downward shift in the output growth of Asian economies in the post-crisis period. This raises the issue of the sustainability of their output growth in the post-crisis period.

Foreign Direct Investment, Exports, and Economic Growth in Selected Emerging Countries: Multivariate VAR Analysis

The paper adopts a time series framework of the Vector Error Correction Models (VECM) to study the dynamic relationship between export, FDI and GDP for six emerging countries of Chile, India, Mexico, Malaysia, Pakistan and Thailand. Stationarity of the series with structural breaks is also examined in the model. Given that these countries are at different stages of growth, we will be able to identify the impact of FDI and export on economic growth at different stages of growth. The results suggest that in South Asia, there is evidence of an export led growth hypothesis. However, in the long run, we identify GDP growth as the common factor that drives growth in other variables such as exports in the case of Pakistan and FDI in the case of India. The Latin American countries of Mexico and Chile show a different relationship in the short run but in the long run, exports affect the growth of FDI and output. In the case of East Asian countries, we find bi-directional long run relationship among exports, FDI and GDP in Malaysia, while we find a long run uni-directional relationship from GDP to export in case of Thailand.

Trade linkages between China, India and Singapore: Changing comparative advantage of industrial products

Purpose - The purpose of this paper is to examine the trade linkages and degree of export competitiveness between Singapore, China and India. Design/methodology/approach - Balassas export performance index and the dynamic RCA index was adopted, as suggested by Kreinin and Plummer to identify the revealed comparative advantage (RCA) of the above countries in industrial products by SITC 1- and 2-digit levels. The Spearmans rank correlation coefficient is used to identify the degree of complementarity between RCA indices. Findings - Given the abundant resources, China and India have comparative advantage in a broad range of manufactured goods as compared to Singapore. From the disaggregated analysis at 2-digit level, the paper finds that the Singapore and China exports are complements, although the degree of complementarity has being declining over time. Meanwhile, Singapore and India exports are found to be stronger complements and stable over time. The results also show that China and India exports are strong substitutes. The paper also finds that the export specialization of China and India has experienced significant changes and shifting to new export products over time. Originality/value - Given the recent trade agreements between China and Singapore and India and Singapore, it is important to examine the trade linkages (complementarity/substitutability of trade) between these countries. The paper highlights the importance of China and India in complementing countries such as Singapore as it climbs the technological ladder to maintain its competitiveness in the world market.

An empirical study on public capital spillovers from the USA to Canada

The effect of public capital on private sector productivity has received much attention in the literature. The impact of an adjacent countrys public capital on domestic productivity has, however, not been previously examined. This paper attempts to fill this gap by examining the possibility of such spillovers from the USA to Canada. Due to close proximity of both countries, the hypothesis of the paper is that these spillovers are important. A production function model introduces US public capital as an exogenous variable and tests for its significance. The results indicate positive spillovers from the USA public capital to Canadian productivity.

The determinants of training participation in Singapore

This article uses the Singapore Labour Force survey data to examine the determinants of workers’ participation in training programmes in Singapore. The results show that different socio-demographic and employment related characteristics affect the training participation of workers. Well-educated and better paid workers are much more likely to participate in training programmes than others. Age has a positive impact on training participation for younger workers (under 37 years), but a negative effect on older workers’ participation. The results also indicate that occupational affiliations have a significant impact on training participation. We also find that married workers seem to be less likely to participate in training programmes, but the difference between married and single is only significant at the 10% level. Finally, gender does not have any significant effect at any conventional level although the coefficient on the female dummy is positive, suggesting females might be slightly more likely to participate in training programmes.

Structural Change and Productivity Growth in the Japanese Manufacturing Industry

Abstract This paper analyses the relationship between structural changes and productivity performances of the manufacturing sector in the Japanese economy, the primary driver of productivity growth in Japan that absorbs a large fraction of the labour force. Using the shift-share analysis, we decompose the total labour productivity growth in Japan into two components: labour productivity growth and structural change across in the manufacturing sector to assess the interaction between them. The analysis provides greater detail on structural changes by classifying the manufacturing industries into four sectors according to the degree of technological sophistication: low-technology, medium-low-technology, medium-high-technology, and high-technology. We found that the superior productivity performance in the Japanese economy takes place most notably in the medium-high-technology sector, as results of fundamental structural change occurred in the late 1990s. This has brought a shift in Japans comparative advantage from lower-technology to higher-technology manufacturing. Finally, some implications will be discussed with respect to this empirical finding.

Towards unitary economics: Valuation of environmental capital for environmental stewardship

The paper presents a simple method of valuation that can sit beside ideology of a unitary economics, which seeks a synergy between materialistic and non‐materialistic aspects of welfare. The non‐materialistic item considered here is environmental stewardship, the lack of which is widespread among neoclassical economists. This is due to the belief that technology could always offset the problems of resource scarcity. The paper uses the basic tools of neoclassical economics to illustrate that resource scarcity is a real issue and that an improved sense of environmental stewardship is warranted. This illustration involves the valuation of environmental capital from the statement of national accounts. Scarcity indicators are defined in terms of the price of environmental capital. This price, which consists of an interest rate and a cost of depreciation, is empirically estimated for Australia.

Impact of public capital on the manufacturing productive performance of Japanese industries

The paper analyses the impact of public capital on the Japanese manufacturing industries from 1970 to 1995. Unlike previous studies, which are based mostly on economy-wide analysis, this study is based on a disaggregated analysis at the industry level. A Generalized Leontief cost function is utilized to estimate the impact of public capital on nine manufacturing industries in Japan. The results indicate that public capital offers no insignificant contribution to the productive performance of these manufacturing industries except for Paper, Textiles and Transport. The paper also suggests that the bubble economy in the 1980s is the contributing factor behind this insignificant effect of public capital.